ODP Corporation

01/26/2021 | Press release | Distributed by Public on 01/26/2021 07:17

Current Report (SEC Filing - 8-K)

Item 1.01.

Entry into a Material Definitive Agreement.

On January 25, 2021, The ODP Corporation ('ODP' or the 'Company') entered into a Cooperation Agreement (the 'Agreement') with HG Vora Capital Management, LLC ('HG Vora').

Pursuant to the Agreement, the Board of Directors of the Company (the 'Board') increased the size of the Board to ten directors and appointed Marcus B. Dunlop (the 'HG Vora Designee') to the Board to fill the resulting vacancy effective as of January 26, 2021 with a term expiring at the 2021 annual meeting of shareholders of the Company (the '2021 Annual Meeting').

Additionally, except in the event HG Vora (together with any affiliates of HG Vora) ceases to own at least 5% of the Company's then outstanding shares of common stock (the 'Company Ownership Level Minimum') or HG Vora has materially breached the Agreement and failed to cure such breach within 5 business days of notice thereof, the Board has agreed to nominate the HG Vora Designee for election as one of the directors of the Company at the 2021 Annual Meeting (as one of a total of not more than 10 candidates for election to the Board at the 2021 Annual Meeting) and not to increase the size of the Board to more than 10 directors prior to, from and after the opening of the polls at the 2021 Annual Meeting.

During the term of the Agreement, so long as HG Vora (together with any affiliates of HG Vora) does not cease to satisfy the Company Ownership Level Minimum, HG Vora has not materially breached the Agreement and failed to cure such breach within 5 business days of notice thereof, and the HG Vora Designee is a member of the Board, the Board may not form a Transaction Committee, Executive Committee or any other committee with functions similar to those customarily granted to a Transaction Committee or Executive Committee without offering to the HG Vora Designee the opportunity to be a member of such committee, and any consideration of mergers, acquisitions or dispositions of material assets, or other extraordinary transactions must take place only at the full Board level or in committees of which the HG Vora Designee is a member.

In the event the HG Vora Designee (or any replacement director appointed in accordance with the provisions of the Agreement) is unable to serve, resigns or is removed as a director during the term of the Agreement, HG Vora has the ability to recommend a replacement director who is a 'Partner' or more senior member of HG Vora and meets the conditions set forth in the Agreement (a 'Replacement Director'), so long as HG Vora (together with any affiliates of HG Vora) satisfies the Company Ownership Level Minimum and HG Vora has not materially breached the Agreement and failed to cure such breach within 5 business days of notice thereof.

The Agreement provides that the HG Vora Designee must offer to resign from the Board on December 31, 2021 or, if earlier, if (a) HG Vora (together with any affiliates of HG Vora) ceases to satisfy the Company Ownership Level Minimum, (b) HG Vora otherwise ceases to comply with or breaches any material provision of the Agreement or (c) HG Vora submits a notice of director nominations in connection with the 2022 annual meeting of shareholders of the Company (the '2022 Annual Meeting'). Prior to his appointment to the Board, Mr. Dunlop executed an irrevocable resignation effective upon the earliest of (i) such time as HG Vora (together with any affiliates of HG Vora) ceases to satisfy the Company Ownership Level Minimum, (ii) such time as HG Vora otherwise ceases to comply with or breaches any material provision of the Agreement, (iii) such time as HG Vora submits a notice of director nominations in connection with the 2022 Annual Meeting and (iv) December 31, 2021 (the 'Irrevocable Resignation').

The Agreement terminates on the earlier of (i) the date that is 14 days prior to the first date on which shareholders are permitted under the Company's bylaws to submit director nominations for the 2022 Annual Meeting and (ii) December 31, 2021, but, if HG Vora (together with any affiliates of HG Vora) ceases to satisfy the Company Ownership Level Minimum, the Agreement will immediately terminate.

During the term of the Agreement, HG Vora agrees to vote all of its shares of the Company's common stock in favor of recommendations of the Board with respect to (i) each appointment, election of directors and any removal of directors, (ii) the ratification of the appointment of the Company's independent registered public accounting firm, (iii) the Company's 'say on pay' proposal, (iv) the Company's Long-Term Incentive Plan and (v) any other Company proposal or shareholder proposal (except any proposals to amend, adopt or extend any shareholder rights agreement) ('Other Proposals') unless, solely with respect to any Other Proposal, both Institutional Shareholder Services Inc. ('ISS') and Glass Lewis & Co., LLC ('Glass Lewis') recommend against the Board's recommendation with respect to such Other Proposal, in which case HG Vora will be permitted to vote in accordance with the ISS or Glass Lewis recommendation. In addition, HG Vora agrees, subject to certain exceptions, to comply with certain customary standstill provisions, including, among other things, that HG Vora will not, and will cause its affiliates, associates and representatives acting on behalf or at the best of HG Vora, its affiliates or associates not to:

make, participate in or encourage any solicitation of proxies or consents;

own in excess of 9.9% of then-outstanding shares of the Company's common stock;

engage in a sale of the securities of the Company that would result in a third party owning or controlling more than 5% of the then outstanding shares of the Company's common stock, subject to certain exceptions,

effect, propose, participate in or facilitate any tender or exchange offer, merger, sale or acquisition of material assets or other extraordinary transaction involving the Company or any of its subsidiaries, subject to certain exceptions (provided that HG Vora may tender shares into any tender or exchange offer, subject to certain exceptions);

seek representation on the Board, seek or encourage the removal of any member of the Board, except as set forth in the Agreement, or seek or request the extension of any deadline for director nominations;

make or take any action in support of any proposal or request aimed at changing or influencing the Board, management, business strategy, policies or corporate governance of the Company;

take any actions which could cause the Company to make a public announcement regarding any of the foregoing, or publicly seek or request permission to do any of the foregoing; or

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